International oil prices rose on Wednesday, driven by escalating supply risks in key global shipping lanes following a fatal attack on a commercial vessel in the Red Sea and the Gulf of Oman, despite diplomatic signals suggesting the Strait of Hormuz could reopen. Benchmark Brent crude futures climbed about 0.93% to $89.74 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 0.97%, closing at $84.01 per barrel.
Iran-backed Houthi militants attacked a cargo ship in the Bab el-Mandeb Strait on Tuesday, killing six people, marking the first reported casualties in over a year of Red Sea shipping incidents. Hours later, the U.S. military said it fired missiles at a container ship, claiming it attempted to breach Washington's blockade of Iranian ports. These events underscore the growing impact of the nearly six-month Middle East conflict on two of the world's most critical maritime chokepoints, even as diplomatic talks to reopen the Strait of Hormuz show some progress.
Senior economist Jose Torres at Interactive Brokers noted that while the prospects for an agreement between the U.S. and Iran on the Strait of Hormuz have become clearer, market concerns over Middle East oil supply persist. Pakistan expressed optimism about a potential U.S.-Iran deal, but Torres pointed out that markets are still awaiting concrete progress. In a research note on Tuesday evening, he stated, "Investors have been betting on a deal for weeks, but at this stage, without actual progress, it's hard to see yields fall significantly or stocks rise further." He added that the modest uptick in oil prices itself indicates that supply-side worries from the geopolitical conflict have not dissipated.
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